Many companies struggle with creating an effective business strategy. Here are six ways to get yours right.
While I enjoy all parts of growing and scaling a business, creating an effective scaling strategy is one of my favorites. I love running sessions and helping a leadership team collect information, develop insights about their market, and decide on their unique course of action.
However, many teams get strategy wrong. Here are the most common mistakes I see and suggestions on how to avoid them. Get these right and you'll not only improve your success, you might just have more fun.
1. Don't compete to win, compete to be unique.
Many people frame business strategy as one company pitted against another in a battle of force and will to decide who will dominate a market. And while that might make for a good movie, it's not a good approach to business.
The reality is that most markets are multifaceted; there are plenty of customers for you all to have a reasonable slice of the pie. The trick is to create an approach and niche that will be reasonably profitable and that will allow you to efficiently sell to your target customers.
Instead of seeing strategy as a race to win, see it as a race to be different. An effective strategy is one which clearly defines your niche in the market based on your unique strengths and weaknesses as a company.
2. It's not about motivation, it's about making choices.
Another common mistake people make is to see strategy as rallying the team to put in extra effort and long hours. They string together inspirational quotes to excite people about the future and the wonderful things that will come with success.
Instead, I find that a good, effective strategy should make things easier. A good strategy clarifies who will be targeted with what product/service. This clarity helps you make decisions and allows a company to simplify their processes to do just those few things really well.
3. Know what you're not doing.
Strategy is fundamentally about choice. It's about reducing the areas of focus to a carefully chosen few. Unfortunately, I see many companies that define their strategy in such a way that still leaves them trying to sell everything to everyone, everywhere.
One technique I use is to have a company list all of the prospects they are not targeting, products they are not offering, and locations they are not servicing. If this is a long and clear list, I know that company has a clear strategy which focuses on doing a few things well. If it's short and vague, I send them back to the drawing board.
4. Don't chase the puck, get out ahead of it.
Another thing I often see is a company developing a strategy in reaction to a specific market event, competitor move, or industry situation. While companies need to respond to events and changing markets, that is not the core of business strategy. Your strategy should guide you on how to respond, but it's not the response itself.
A strategy defines a set of choices and a series of policies on how you are going to make decisions and what you are going to prioritize. By design, strategies are long-term plays based on a logical analysis of the trends in the market and where future opportunities are likely to exist.
5. Strategy is worthless, if it's not communicated.
Often times, companies spend weeks developing a sophisticated and smart strategy, but then they put it in a binder and leave it on the shelf. At best, a few people on the leadership team can recall the content months later, but the vast majority of the company has forgotten or is oblivious of the work.
Strategy needs to be simple to understand and easy to communicate. The fact is that everyone in the company needs to know the strategy as they are the ones implementing it. Your front line workers make more decisions on strategy each and everyday than any executive. It needs to be simple and it needs to be communicated frequently.
6. Strategy is a regular process, not a document.
Too often I see teams create a great strategy and then frame the final document on the wall. They check the box and get back to day-to-day business. The power in strategy is the discussion and application not the document. Great teams talk about strategy weekly and grapple with strategic decisions on a daily basis.
Strategy is not easy, but it doesn't need to be hard. The trick is to make it a regular process and routine inside your leadership discussions. And while strategies should be simple to be effectively communicated, they need not be simplistic in approach. Much like writing a good letter, the more concise a strategy is, the longer and harder a team most likely worked on it.
This article was originally published on Inc.com: https://www.inc.com/bruce-eckfeldt/most-companies-struggle-to-develop-a-good-business-strategy-here-are-6-common-mistakes-how-to-avoid-them.html